Conform selected edges or vertices to the objects surface
As the object you want edge loop to stick to is circular (cylinder) then the edge loop should become circular. This can be easily done either via default command Shift+Alt+S, then setting the factor to 1 or via LoopTools addon, Circle option. See also How do I make vertices equidistant from a given center?  

Note to avoid making faces too distorted, in this case outer edge loop shown on screenshot is better to be moved towards cylinder a bit or add one more edge loop in between existing ones.